TFU | May 28 – June 3

The CFPB and CFTC are working together to build a “regulatory sandbox” to support fintech innovation; a small blockchain startup in the Cayman Islands is about to raise $4B through digital token sales; Amex is using blockchain to support a rewards program, giving it access to sought-after purchase information; Visa experienced a European network outage that left many consumers unable to pay with their cards; and U.S. digital banking app Chime raised $70M in new funding.

Regulatory “sandboxes” have gained increasing traction since 2016, when the U.K.’s Financial Conduct Authority (FCA) established its “Project Innovate.” The initiative has earned plaudits from international commentators, regulators, and fintech firms alike, with the FCA noting in 2017 that most cohort firms “have tested products in the sandbox [and] have gone on to take their innovation to market.” Other countries including Singapore and Australia have since set up their own sandboxes (and the FCA is now looking at expanding its own), but the approach has not been particularly embraced by U.S. regulators.

Despite some limited efforts to generate interest in a federal regulatory sandbox (e.g., Rep. Patrick McHenry’s 2016 bill), the decentralized patchwork of U.S. regulators presents structural challenges to a sandbox approach that other countries do not face. However, some U.S. states (e.g., Arizona) recently have begun looking at sandboxes; and now it appears that momentum may be gathering at the federal level as well. Stay tuned!

PayPal integrates its payments services deeper into Google. The global payments firm is extending its relationship with Google to encompass its “entire ecosystem, including Gmail, YouTube, Google Pay, and Google Store.” The deeper ties between the two services will allow Google users to set PayPal as their default, “embedded payments option across all Google products and services.”

Blockchain firm Paxos raises $65M Series B. The company, which offers solutions for digitizing assets and settling trades in precious metals and securities, closed a $65 million Series B funding round led by Liberty City Ventures and RRE Ventures. Paxos will use the new funds to “scale up its operations and expand product offerings across international capital markets.”

Chime raises $70M Series C. The San Francisco-based mobile banking service raised $70 million in new funding, valuing the firm at nearly $500 million. Chime caters to millennial customers by offering fee-free services, no minimum balance, and an emphasis on a mobile, consumer-friendly interface.